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Manufacturing Sector

Volume 528: debated on Wednesday 18 May 2011

It is an honour to have secured my first Westminster Hall debate on this important subject, and to serve, as a fellow north-west MP, under your chairmanship, Mr Crausby. Before I say anything about manufacturing, its status and its role, I want to explain that I did not apply for this debate so that we could have a party political row. I want to get into some of the specific technicalities of what the Government are doing in relation to manufacturing. I hope that the Minister will take what I have said at face value and that he also wants to engage with the issues, not the party political stuff that we often get caught up in.

I want to concentrate on two specific aspects of manufacturing. I want us to acknowledge that this is a time of opportunity for manufacturing. Over the past decade, we had a relatively high pound—sterling was riding pretty high. Now it is lower, which offers an opportunity. I also think that strategic changes in the global economy to do with the cost of fuel and transportation and the price of carbon offer us real opportunities in the supply chain. At this time, we as politicians must weigh in behind manufacturing as a sector. I hope that everybody present agrees with that sentiment.

The first aspect that I want to look at relates to career choices, young people and reputation issues for manufacturing, but my real focus will be on the second aspect, which relates to exports, UK Trade and Investment and Government support. There is much else to be said about what manufacturing in Britain needs, but I am sure that we will address those at other times in the House.

First, on reputation, less than 3% of people in London work in manufacturing, but many people work in the media and are journalists, so when it comes to talking about the presence of manufacturing businesses in Britain, the popular media gives us an unfortunate feeling and sense that Britain does not make anything anymore. I know that hon. Members present know that that is just not true. If anyone doubts that, let me put on the record how wonderful it is for me as a constituency Member of Parliament to visit Unilever, where we make a huge range of products that people buy every day in supermarkets. Those products are made in Britain, in my constituency, and we are very proud to have them. Not far from my constituency, Airbus makes the wings for the A380. It is inspiring for young people in Wirral to see my constituents go to Airbus and make those amazing aircraft, which are sold all over the world. Every time someone gets on an Airbus aircraft to go on holiday, they are likely to be on an aeroplane whose wings were made by some of my constituents. I say this to all Members: let nobody tell us that we do not make things in Britain; we do. We make amazing things. One reason why I applied to secure this debate was to start a discussion about how we can get that story told in a better way.

The situation is having an impact on young people and employment. Throughout the country, young people feel that their options are limited. They are limited not only because it is a tough time for our economy, but by knowledge. Without getting into the whole debate about careers, I think that young people face some difficult choices and are not necessarily aware of the opportunities that exist for them in manufacturing. I do not blame teachers for that. Teachers have a huge amount to do, and we cannot possibly ask them to know the latest data about manufacturing opportunities as well.

I would like to draw the Minister’s attention to the Manufacturing Institute’s “Make It” campaign, which has run successfully in the north-west—without much public subsidy, I might add—and with the support of partners including Jaguar Land Rover, Siemens, Tetra Pak, Cogent, Robert Wiseman Dairies, James Walker, Chemicals Northwest, Aircelle, C-TEC and many others. Those are all fantastic companies and they are working with the Manufacturing Institute to engage young people and give them real skills.

I congratulate the hon. Lady on securing this debate. The sentiment that she has expressed is most welcome, and I am sure that all hon. Members want to do their bit to increase the profile of manufacturing in this country. Will she join me in supporting the associate parliamentary manufacturing group’s “Made in Britain” competition? It will seek to showcase the best that we have to offer in manufacturing and, as a by-product, encourage young people to do the same. A career in manufacturing is an excellent way forward.

I thank the hon. Gentleman for his intervention and for his steadfast support in Parliament for manufacturing. The associate parliamentary group is incredibly important to this discussion. The competition that he has mentioned is fantastic. We should all get behind it and make sure that people see that some of the things that are made in this country are fantastically diverse. It is not about telling a story about our past, but about telling a story about what is going on now.

A company in my constituency makes the chemicals that are sent to Korea to help make iPhones. How cool is that? I think that young people from local schools who visit the company are genuinely inspired about where a career in science could lead them. That is about making the things that we have and use now. It is not about old-style factories from many years ago. I should also mention the work of General Motors in engaging schools. It has one of the most productive car plants in Europe in Ellesmere Port. Showcasing our high level of technology not only helps abroad—we will talk about exports later—but helps to inspire young people so that they can see that they have a future in this country and in making things that we all need.

Will the Minister agree to meet me and the Manufacturing Institute at some point to discuss how we can advance its ideas for the “Make It” campaign? It has been particularly successful in the north-west, and I would like to see those opportunities widened to people elsewhere in the country. The approach to schools has to be business-led. We cannot ask heavily-laden head teachers to do any more than they are already doing. We have to enable businesses in manufacturing to take the lead and to assist head teachers.

Something else that we might want to consider as a country is how we can get more business leaders from manufacturing to become school governors. There are a couple of examples on my patch that I think are particularly successful. It enables that body of knowledge to be used by schools and young people as a natural link that does not have to be forced.

The second issue that I want to address relates to exports and Government support. UK Trade and Investment recently produced an interesting strategy, and all of us who care about UK manufacturing and exports need to pay attention to it. It is an important document, because UKTI is in the lead now in terms of exports from this country. That could not be more important at a time in which we are seeing financial difficulty throughout Europe and in this country. I have said that I do not want a party political debate, but we have decided to change the structure of regional support in England. The Government have decided that regional development agencies were not the answer, and we now have local enterprise partnerships. I am grateful for the one that has been set up in my area, in the Liverpool city region. There is a changing picture and we need to work out how UKTI’s strategy will work. I have a few questions about that, which I will ask the Minister in a moment.

Before I do, I want to say briefly that one of the biggest opportunities in manufacturing right now is the supply chain. I mentioned in my opening remarks the place of sterling now compared with what it was some years ago and the business case for the supply chain shifting to the UK in the light of fuel and other transport costs. Some work could be done on that. I hope that businesses around the country and the Government are working to make that business case because it could go unnoticed; for many years, people have had an assumption that the best thing for any business is to source overseas because labour costs are cheaper elsewhere.

I am grateful to my hon. Friend for securing this important debate. I could not agree more when she says that the perception is sometimes that this country does not make anything anymore. Part of the reason for that is past changes to supply chains; people perhaps think that we do not manufacture anything at all. How can we get a wider understanding of how the supply chain works? The example that my hon. Friend gave from her constituency of how one specific part of manufacture leads to a much bigger picture was powerful. On the whole, manufacturing is a very successful story for this country.

I thank my hon. Friend for that intervention. It is a difficult story to tell. When a journalist or somebody from the media is taken to Vauxhall Motors or any number of big, exciting manufacturing locations, they can see what is happening. However, in the future, there will increasingly be smaller, more specialist suppliers. In addition to fuel costs, the quality of the product is another driving factor behind the business case for moving the supply chain closer to sites of production.

As we move towards higher-tech production and try to meet some of the challenges of the greener economy, we need a better quality of product. In terms of quality control, we might be looking at smaller, more specialist producers. It is difficult to tell that story, but it has to be done. As the BBC moves northwards, I hope that there will be lots of opportunities for those of us from the north-west to get these stories out there. It is a difficult challenge, but it is about telling a story of high quality.

I congratulate my hon. Friend on securing this timely debate and I am pleased to serve under your chairmanship, Mr Crausby. On the supply chain issue, I represent a manufacturing area so I know that it is important to consider the green economy, particularly renewables. Much of the investment in renewables will come from the Government and electricity bill payers. We need to have the imagination to ensure that those jobs come to the UK and to invest in the supply chain, which my hon. Friend has mentioned adroitly in her presentation.

My hon. Friend’s intervention is important. I will come to some of my specific questions for UKTI, about how it recognises not just the sectors that are already successful at a high level, but the sectors that are strategically placed for the future, even though they might be small at the moment. Green energy is certainly one of those. How are we going to ensure that Britain is selling green energy technology to Brazil, Russia, India and China in the future? We do not do much of it at the moment, but do we want to do it in the future? That is an important question to ask in terms of strategy.

I shall shift away from the supply chain specifically and on to UKTI’s strategy, which is contained in an interesting document that is important for all of us. I want to ask the Minister the following questions. The strategy identifies five groups with subsectors relating to five parts of the economy, one of which is manufacturing. Of those five groups, what will the resource balance be across UKTI?

It is easy to say that what we want is success and to drive resources towards the bits of the economy where we already have success in exporting parts abroad. We might also say that if we are really going to rebalance the economy, we need to take somewhat more of a risk with our resources and invest in those things with which we might not have had a history of high-level success over the past 10 or 15 years but in which we know we need to invest for the future. I would be interested in understanding a bit more about resource balance.

On monitoring, when we develop the strategy, how will we watch what happens and who will feed back to Parliament and to businesses on the ground? There has sometimes been a bit of a disconnect in terms of understanding to whom UKTI is responsible, who its customers are and how it feeds back successes. When will that happen? We do not want to spend all our time bearing the costs of monitoring, with a thousand tick boxes and charts.

I thank the hon. Lady for securing this valuable debate. As the owner of a manufacturing business, I have an enormous interest in everything that she has to say. One question that I would like to add to her list of things to mention is about cash flow. Although that is not a new problem, small manufacturing businesses are suffering from badly extended payment terms, with the average number of days until payment being around 88. That is astonishing and is affecting some good local manufacturers in a very bad way—some have been forced out of business. A European late payments directive has come into force, but it does not seem to be addressing the issue. I hope that she agrees that that matter needs addressing.

I thank the hon. Lady for her intervention. She is absolutely right. She has reminded me of an important point that I wanted to make about UKTI—how we check its work and ensure that we, as Members of Parliament, have full oversight. She is right about payment times; they can be absolutely make or break. I have seen that with companies in my constituency.

If there is a European directive, we, as a country, need to make Europe work for us. I suggest that in the British civil service, there has been a culture of applying directives absolutely to the letter in a way that is very formulaic, rather than saying, “Great, we’ve got this European system. How do we make this work for us?” I gently suggest that other European nations have done rather better than us. We need to see Europe as an opportunity. If there are such directives, that is fantastic—let us make them work for business, rather than just accepting them being handed down and administering them to the letter without watching what impact they have on the ground for business. It is important for us, as a community of politicians, to watch that. Businesses often point out to me how British civil servants tend to treat the rules on state aid and state intervention differently from how civil servants do in other countries. That is an important issue to watch because we can disadvantage ourselves without even meaning to.

Aligned to that is the matter of how the UKTI strategy will affect different parts of the UK. I mentioned that only nearly 3% of people work in manufacturing in London, whereas one in 10 in the north-west and more than one in 10 in the north-east do; there is clearly a differential need. Many more people work in manufacturing in places close to the constituency of the hon. Member for Gosport (Caroline Dinenage). We must recognise that if we have one strategy for the whole UK, we have to continue to watch how that helps different parts of the UK with different needs.

The strategy mentions working alongside the Welsh and Scottish Governments and the London Mayor on their plans for exports. That is fantastic and I support that approach. However, we obviously need UKTI to work with somebody in the English regions—the city regions. If UKTI is not working with regional development agencies, it needs to be working with local enterprise partnerships, which do not have anything like the same resources. They also do not have the same staff to call on the services of UKTI.

I have a final question. How will we check that we are not disadvantaging those parts of the country that do not have their own Parliament or Assembly? How empowered will UKTI staff be to add resources to the parts of the country that need them? I have heard anecdotal evidence that in the past UKTI has been quite centralised around Whitehall. It would be much better to see that service as a network of people embedded in local economic clusters. I hope that the Minister will support less bureaucracy from the centre and more empowerment to people working alongside companies to deliver the strategy. That is important.

In conclusion, I hope that the Minister will be able to respond to those specific questions—if not now, at a later date. Manufacturing has a huge amount to offer this country. I know that the Government agree and I am grateful for that support. There is every reason to think that now is the time for a new impetus. Strategically and globally, we are well placed to improve our manufactured exports. They have a huge amount to offer the country—not just next year, but in the next 20 or 30 years.

In recent years, we have seen manufacturing go through a high level of productivity improvements, so we are very well placed at the moment to maximise impact. However, if we leave things to chance and have a do-nothing option, it will be business as usual and only the sectors that are already strong and influential will be so. I hope that we can all take this opportunity not to have business as usual and to empower both UKTI and the rest of Government really to work alongside manufacturing.

May I also congratulate the hon. Member for Wirral South (Alison McGovern) on securing the debate on this important subject? I gather that this is her first debate in Westminster Hall. It is about an excellent subject.

The hon. Lady pointed out that in her constituency, as in others, modern manufacturing is crucial. She mentioned Unilever. We have learned about the role of GM Vauxhall at Ellesmere Port and that of Airbus nearby. All are at the cutting edge in their own fields. They are all businesses of which we should be proud and I know that they are directly important to her constituents. She is right to say that manufacturing should be a non-partisan issue. I share fully her desire to ensure that manufacturing is at the heart of Government policy. We are determined to ensure that we establish a more resilient economy so that when we face, as we will, different shocks and challenges, we have a broader economy. Manufacturing plays a vital role in that.

I would like to put on the record my own encouragement and support—my private office will regret this, no doubt—for the associate parliamentary manufacturing group, which is very important. It is absolutely right that hon. Members across the House should feel that they can play a part in promoting this vital part of our economy, and I happily commend the group’s work.

As the hon. Lady said, some would have us believe that we are not in the business of making things. They are wrong. In fact, this country remains one of the world’s leading manufacturing nations. Manufacturing generates approximately £140 billion of our economy—some 11% of gross value added. On exports, to which she rightly referred, manufacturing represents 55% of everything that we export to the rest of the world. Encouragingly, in the past year we have seen an increase in that programme—approximately 19% on a year-on-year basis. That is good news.

Let me turn to the specific points that the hon. Lady raised about the profile and status of manufacturing. In a sense, that is a broader and longer question. There are two issues. The first is to tackle head-on the outdated perceptions of what modern industry means. The second is how we equip people, so that industry gets the calibre and range of people that it needs.

Changing those negative perceptions—the hon. Lady is right about the media—will be a challenge; some of them are deeply embedded. For example, in 2009, the number of graduates in science, technology, engineering and maths actually represented 43% of those leaving our universities. Only 5%, however, go on into industry. Clearly many young people who have the potential skills that industry needs are going elsewhere. They have not seen industry as something for them. That is the mindset that we have to change. We have to show young people what is the case, rather than what they might think—to fire up their imaginations and ensure that they can see that there are genuinely rewarding careers in industry.

I would like to highlight the work of the Manufacturing Institute, to which the hon. Lady referred. I would be more than pleased to meet its representatives and the hon. Lady. They have already met officials in my Department, and I strongly commend their organisation’s work. I suspect that some of that work coloured my own views on what we needed to do when I was asked to take on this role a year ago. When I started, I wanted to showcase, in the large reception area in the Department, what we make. We have already been able to show a wide range of products, through a series of exhibitions.

The hon. Lady referred to the composite wings. After some challenges, not least having to take the door down, we installed one of the composite wings into the reception area to demonstrate what we make. We also exhibited the first zero-carbon motorbike made in this country. There are many other products that we want to exhibit and we are building up that programme so that people across business, and the wider public, can see what we do.

We want to go further. We have announced open days across industry so that factories, and those who work in them, can show their neighbourhood what they make. Rather than telling people, it is often wiser to show them; that is the heart of this argument. That will change perceptions. GM Vauxhall and Jaguar Land Rover are among the many automotive businesses who have signed up to this, which we are calling, “See Inside Manufacturing”. We will roll that out now over the whole manufacturing sector so that we can engage people and show those who have never stepped into a modern factory what it is really like.

We want to ensure that we tackle the myth about low salaries. As the Manufacturing Institute points out, there is a misconception. According to the Office of National Statistics, the median salary for professional engineers is just more than £36,000 a year, which is in the top 30% of UK salaries. As people’s careers develop, that rises to a median level of £55,000 for a skilled engineer, which is in the top 10%. Most people do not realise that, and that is the mindset that we are working with industry to change.

I am aware of the time, so I will just touch on the issue of skills and then move on to the issue of exports. The issue of skills is crucial. If we fire up the enthusiasm of the next generation of engineers, we need to ensure that they are equipped to do the job. We have focused on university technical colleges, so that we can deal with the vocational desire that many young people have while still at school age—14 and onwards. They will be able to get their hands dirty and do practical things that they can learn from. That is what UTCs are all about.

That needs to be harnessed by going further, so we are expanding massively the whole apprenticeship programme. There are excellent examples—I am aware of the one in Wirral, the Wirral Apprenticeship Scheme, which local businesses take up. We are looking to put £180 million, from the last Budget, on top of what we have planned for, so there will be approximately 250,000 additional places in the next four years. That will take the perception of young people through to equipping them with the skills that can benefit industry, too. We need to deliver on that through-thinking.

In the few moments I have left, I will touch on exports and the supply chain issue. The five-year plan set out by UKTI is crucial. The hon. Lady is right; if it were to be run from London without any genuine local roots, whether in Merseyside, Manchester or the midlands, it would fail in its task. We have made sure that UKTI is working with local enterprise partnerships across England, as well as our good friends in Wales, Scotland and Northern Ireland, so that they have a strong national voice abroad, but deep local roots in terms of local knowledge and information. In particular, that means that the international trade directors, who are the local keys to this, are already developing strong working relationships with local enterprise partnerships.

The hon. Lady mentioned the supply chain, which is very important. The automotive sector is crucial. In the past 12 months, I have pushed the industry and worked with it. We have now developed a road map. The industry has identified £1 billion-worth of goods that it currently imports to use in the vehicles that it assembles, and which it would be happy to procure in this country. That is a good example of how we can develop, and I want to build on it if I can.

In conclusion, I endorse totally the points raised by the hon. Lady. We need to ensure that people understand modern manufacturing and recognise it as a rewarding career. That is why we have been showcasing leading products and producers, promoting the benefits of STEM subjects, and working with industry to show that there are good and valuable careers. There is a lot more to do in this field, but this is a welcome debate and I hope that hon. Members on both sides of the House, across the political parties, can work together—not just in Parliament, but with the rest of industry as well.